If your business has locations in multiple cities or states, you could benefit from tax preparation outsourcing—having a third party or software solution handle one or more areas of your property tax cycle. Outsourcing is an appropriate solution for teams that:
- Consistently work long hours to complete property tax compliance tasks.
- Struggle to meet tax return deadlines, or miss them entirely.
- Frequently face compliance challenges and are uncertain about how to overcome them.
As your business grows, the above issues will only become more prominent. That’s because the more jurisdictions you operate in, the more advantageous tax outsourcing services become.
Some states make filing simple. Take Maryland, for example—your business only has to file a single return for all locations in that state. That’s a relatively easy task for your tax team to handle when it comes to business personal property. In contrast, states like Texas are more complex. You can’t file one return at the state level; instead, you have to contend with numerous local jurisdictions—Texas has 254 counties—and their specific valuation factors. This makes the tax process increasingly more burdensome.
Want to avoid outsourcing and increase the efficiency of your existing team instead? See how TotalPropertyTax software streamlines your tax workflow significantly.
Outsourcing Tax Return Preparation (& Its Implications)
It makes fiscal sense to outsource tax preparation services if you’re dealing with numerous local assessments that require a lot of time from your already limited team. Lack of manpower is the main reason why most organizations seek tax preparation outsourcing.
Using outsourced tax services is certainly a viable path, but there are a few pitfalls to consider. For example, the consultant or team you hire may not be able to prepare your returns any faster than you might, particularly if they don’t have sufficient experience in your industry; there’s also greater potential for sensitive data being mishandled or exposed.
That’s why it’s important to properly qualify the service provider you plan to use and set up an appropriate oversight process. You’ll need to structure how you communicate, transfer data, review work, and so on. Inexperience and miscommunication can result in inaccurate filings, which cost time and money.
If you plan to hire property tax consultants, consider several important questions:
- Do they have sufficient tax preparation experience for your return’s level of complexity?
- Do they have specific knowledge and experience regarding your industry and states of operation?
- Do they have proper protocols in place to ensure your tax return data is secure?
- Do they understand your tax return data—for example, do they know the physical location of your assets and whether those assets should be reported in multiple places?
But outsourcing isn’t the only answer to lack of manpower. In cases where you’re filing at the state level and have fewer returns to complete, it may make more sense to forego tax outsourcing and focus on making internal process improvements instead. For example, you may just need to create some efficiencies in your tax preparation process by offloading manual, time-consuming tasks with the right technology. Specifically, property tax software offers a noticeable efficiency boost for your tax team by helping you prepare and file your tax returns, and even track and process bills.
Below, we walk through a few areas of the property tax cycle you may consider outsourcing, and how relevant tax preparation services or software can be for each.
4 Property Tax Cycle Areas Where Outsourcing (& Software) Can Help
1. Collecting & Updating Data
It can be a challenge to keep up with collecting and updating internal and external data. Internal data primarily relates to fixed assets—descriptions, amounts, values, etc. It also includes compliance data, such as reporting jurisdictions and your tax liability in each location. While you should have this data available, it can be time-consuming to collect and organize it all in a manner that benefits your tax decisions.
External data is more difficult to collect. It pertains to tax rates, valuation tables, reporting requirements, due dates, and the like—all of which varies from one jurisdiction to the next. There are potentially hundreds to thousands of nuanced distinctions that can easily cause headaches for your tax team.
Tax outsourcing services can be quite beneficial for supplying key insights you might not know about. Consultants with local expertise can offer advice on, for example, the best county in which to build a new facility. The right recommendation could reduce your tax liability by millions of dollars each year.
Property tax software can make keeping up with internal data a much easier task because it's equipped to handle massive amounts of asset data. The same software can automatically track jurisdiction-specific requirements to ensure you stay in compliance and avoid penalties.
2. Filing Returns
Outsourcing services can be helpful for organizations that have a large number of returns to file. If you operate in multiple Texas counties, for instance, rather than dedicating the bulk of your internal resources to handling a single state’s filings, you could choose to outsource filing for that state to a tax preparation firm with relevant experience. By taking this route, you not only lower the demand on your tax team, but also gain local expertise.
You could, however, continue to file returns in-house and dramatically speed up the filing process with property tax software. Advanced software like TotalPropertyTax (TPT) automates the filing process by creating return packages complete with cover letters, return forms, and attachments (even custom attachments such as authorization letters). With one click, TPT populates all your asset data on the appropriate state or local form, all of which are automatically updated every year, for every jurisdiction. You can generate and file 500 returns in under 15 minutes with TPT—error-free.
3. Making Payments
You make payments everywhere you file, so this area also presents a challenge for growing businesses. Do you have a proven system in place for payment tracking? Verifying payments for each filing takes manpower you may not have, especially when you consider time restrictions—some jurisdictions have 20- to 30-day turnaround times.
While you may choose to outsource this area to a third party, keep in mind that most tax preparation firms won’t handle payments without also handling filing, as the two areas are closely connected.
On the other hand, much like with filing returns, tax preparation software can add efficiency to your tax team’s workflow by tracking bills from missing to final approval status. It can also keep you up to date on bills with upcoming due dates so you’re never caught by surprise. TPT integrates with Anybill, a bill-paying service, to ensure you always pay your bills correctly and on time.
You always have the right to challenge assessments you believe are unfair or inaccurate. But appeals require more than just time—often you need knowledge of not only your property but others’ properties as well. For example, similar properties in your jurisdiction may have been valued lower, something you could only uncover through research.
External consultants can be useful for appeals if they have experience with either a specific jurisdiction or your industry. If that consultant is already doing advisory work for you, then so much the better—it means your filings and appeals will be in alignment.
Why is alignment important? Assume you (or a consultant) files a return, and you hire another consultant to initiate and manage the appeal for that return. It’s possible that the consultants (or you and the consultant you hired) could end up working at cross-purposes, with one advocating for a value that matches the return and another advocating for an even lower value. Such a mismatch in efforts could cost you money.
On the technology side, property tax software can even generate appeal letters and make creating appeal packages a quick task.
Get a handle on your tax preparation with TotalPropertyTax software.
Sometimes the best option for getting extra help isn’t to hire a third party—it’s to improve the efficiency of your own team. When equipped with the right tool, your team members can meet any challenge successfully.
TotalPropertyTax (TPT) is advanced property tax software that automates the most time-consuming tasks associated with the property tax cycle, dramatically simplifying your workflow:
- It contains the most up-to-date tax data from thousands of jurisdictions across the U.S., eliminating the need for you to do manual research.
- It keeps track of internal data on assets across all your locations.
- It reduces your filing burden by maintaining, classifying, and depreciating assets based on county-sourced or even user-provided schedules.
- It auto-completes many state and local forms from previously entered data.
- It tracks all your bill due dates to help you make every payment on time in every jurisdiction. You can even connect to your accounts payable (AP) system for check writing to make the process even more seamless.
- It can quickly create appeal packages with an appeal letter and any custom attachments necessary.
TPT helps you be proactive with tax preparation, from data collection to appeals. Give your team the efficiency boost it needs to minimize or even eliminate the need for tax preparation outsourcing. Schedule a demo of TPT today.